The online trading platform app is bringing a new generation of investors to the stock market. Casual investors are no longer forced to use bank-run brokerage firms due to apps such as Robinhood and All Us Financial.
But after controversy erupted from Robinhood’s management of the stock bounce Reddit-fued GameStop, the market is opening new apps to manage trades.
One of them is Gatsby, an app specifically focused on option trading. This is an example of how the online trading ecosystem is changing, becoming not only more competitive, but also broader in scope.
The app has branches in more than just stock trading
Apps like Gatsby focus on option trading, which is a form of trading in which users reserve the right to buy stocks in the future. The purchasing decision is based on whether you believe the stock price will increase or decrease, also known as a call or put.
When you buy an option, you set the price at which the stock will be purchased, when the option is called.
So if you buy an option with the bid set at $ 100 and the stock is sitting at $ 110 at expiration, you earn a net difference. The price of an option varies depending on the terms of the option and is usually lower than the value of the stock.
This is the attraction of buying options: with the same dollar amount, you can potentially increase the net profit of your investment.
Option trading is a risky, long-term investment strategy often overlooked by amateur investors. What Gatsby is doing is removing the barrier to entry into option trading with their simplified version of the practice. The app only allows users to purchase a put or call and wait for the option to expire.
Online investors looking for a combination of community and gamut
As shown at the GameStop Rally, when trading is combined with a strong online community and enticements to gamification, online merchants — even those who have never considered trading before — react.
This is something that the creators of Gatsby and other recent trading apps have kept in mind.
In the case of Gatsby, the simplified investment model it offers is enhanced by the way it moves the stock market. The cultivation of the online community Gatsby allows users to collaborate on tracking trends in the stock market and place bets on puts or calls accordingly. As we have seen the way the Reddit community is tied together to buy Gametop, AMC and Nokia stock, this is a factor that could reap huge rewards for a united community of investors.
In addition to providing users with the ability to come together to share their speculation that has the ability to pay for them in major ways, Gatsby offers no further commissions or contract fees and offers rewards for purchasing options Encourages your platform.
There is just one more way online merchants do what Wall Street does
As the hype surrounding Robinhood turns disenchanted, casual investors are looking for alternatives. This fall from grace came not only with severe criticism and a class-action lawsuit due to Robinhood’s handling of GameStop Surge, but a misleading business model.
Forbes previously reported that “Robinhood was designed to make a profit by selling the trading data of its customers to the very sharks on Wall Street who have spent decades and influenced billions of investors.”
The new generation of trading apps is heartening that disillusionment, focusing on offering users an option they can trust. Gatsby, for example, treats its users exclusively in cash received from stock transactions, eliminating the need for a traditional brokerage firm in option transactions. By doing so, Gatsby can make a profit without selling data to Wall Street.
The high-risk, high-return options trading world is opening up to a new generation of investors, indicating another significant development in the democratization of stock trading. As consumers continue to articulate their demands, I think we will continue to see new apps that are more committed to their customers than big banks and Wall Street merchants who have monopolized the market for so long Have given.